Indian government bonds may face selling pressure ahead of Friday's weekly auction, where New Delhi will sell ₹34,000 crore ($3.58 billion) of the benchmark 6.94% 2036 bond, taking total issuance to ₹2.38 lakh crore. A primary dealer trader expects yields between 7.38% and 7.42%, after 7.3921% in the previous session, with the cutoff possibly rising above 7.40%. The pressure comes as September consumer inflation accelerated to 5.54%, which most economists expect to cross the central bank's 6% upper tolerance band in October, and as bets on a larger December rate hike grow. Overnight indexed swap rates have also risen, with the one-year rate up 10.50 bps to 6.5450%, the two-year up 4.5 bps to 6.64% and the five-year at 6.7825%.
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